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GPT Raises Annual Funds From Operations Target

SYDNEY – GPT Group (GPT.AU) said higher valuations for its office and retail properties in Australia drove a 28% rise in half-year net profit, as it upgraded an annual target for funds from operations.

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GPT reported a net profit of 752.3 million Australian dollars (US$590.9 million) for the six months through June, up from A$586.4 million a year earlier. That reflected a A$480 million rise in the valuation of its real-estate portfolio and "a lower negative mark-to-market and net foreign-exchange movement of financial instruments," the company said.

Funds from operations rose by 3.7% to A$279.8 million in the half-year period, which management said was driven by higher contributions from its investment portfolio.

GPT said it now expected 3% annual growth in funds from operations per security, up from a prior forecast of an increase of about 2%. It continues to expect a 5% rise in its full-year distribution.

GPT owns and manages real-estate assets including the MLC Centre and Australia Square in Sydney, Melbourne Central and Highpoint Shopping Centre in Melbourne and One One One Eagle Street in Brisbane.

The company has been investing heavily in Sydney's office market, anticipating vacancy rates will fall to about 5% until around 2020. Work to build new metro train stations in Australia's biggest city has helped to constrain the supply of office space, and contributed to a sharp rise in rents.

"The retail portfolio continues to perform well with total centre MAT growth of 3.4 per cent during the period," Mr. Johnston said. "The performance of the portfolio reflects the Group's ongoing focus on ensuring the right tenant mix, and strategic investment in our assets."